19/06/2023

FOREIGN
TRADE
OPERATIONS

PHAN VŨ NGỌC LAN – MDE

International Business Administration Department
lanpvn@huflit.edu.vn

INCOTERMS

CHAPTER 2
PART 2

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IN THIS CHAPTER
General information

A brief history

Purpose and Scope

Incoterms®2020

Other versions of Incoterms

CLASSIFICATION (1) – BASED ON MODE OF

TRANSPORT
B. Rules for sea and inland waterway transport
FAS Free Alongside Ship
FOB Free On Board
CFR Cost and Freight
CIF Cost Insurance and Freight

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FAS FREE ALONGSIDE SHIP

FAS (INSERT NAMED PORT OF SHIPMENT)
(INCOTERMS 2020)

FAS FREE ALONGSIDE SHIP

FAS (INSERT NAMED PORT OF SHIPMENT)
(INCOTERMS 2020)

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QUAY

FAS FREE ALONGSIDE SHIP

FAS (INSERT NAMED PORT OF SHIPMENT) (INCOTERMS 2020)
 .
The goods placed
on a quay
alongside the
vessel
Ex. FAS
Laemchabang
port, Chonburi,
Thailand QUAY
(Incoterms 2020)

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BERTH & QUAY

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BARGE [ C ]
a
UK /B ːDƷ/
long boat with
a flat bottom,
used
forcarrying heav
y objects on river
s or canals

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FAS FREE ALONGSIDE SHIP

FAS (INSERT NAMED PORT OF SHIPMENT) (INCOTERMS 2020)

The goods
placed on a
barge
alongside
the vessel

BARGE

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FAS FREE ALONGSIDE SHIP

FAS (INSERT NAMED PORT OF SHIPMENT) (INCOTERMS
2020)

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FAS FREE ALONGSIDE SHIP

FAS (INSERT NAMED PORT OF SHIPMENT) (INCOTERMS 2020)
point of risk transfer = point of cost transfer
= alongside the vessel at the port of shipment named

placed on a quay placed on a barge

alongside the vessel alongside the vessel

FAS (insert named port of shipment) (Incoterms 2020)

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FAS FREE ALONGSIDE SHIP

FAS (INSERT NAMED PORT OF SHIPMENT)
(INCOTERMS 2020)
The seller delivers when the goods are placed
alongside the vessel (e.g., on a quay or a barge)
nominated by the buyer at the named port of shipment
or when the Seller procures goods already so
delivered.

The seller bears all risks of loss of or damage to the

goods until they have been placed alongside the vessel.

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FAS FREE ALONGSIDE SHIP

FAS (INSERT NAMED PORT OF SHIPMENT) (INCOTERMS
2020)
- Seller’s obligations:
+ To provide the goods, necessary documents (commercial invoice,
transport document),
+ To obtain any export license, conduct all necessary customs
formalities for the export of the goods,
+ To deliver the goods alongside the vessel (e.g., on a quay or a
barge) nominated by the buyer at the named port of shipment.

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Obligations FAS
1 Checking + packaging + marking
2 Loading on means of transport at seller’s premises

3 Export clearance/formalities
FAS FREE 4 Delivery/transport document
ALONGSIDE 5 Domestic precarriage (inland freight) from seller’s
SHIP premises to place/port of shipment
(INSERT NAMED 6 Loading on (main) carriage
PORT OF 7 Contract of (main) carriage to named place/port of
SHIPMENT) destination
(INCOTERMS 8 Contract of insurance
2020) 9 Unloading at named place/port of destination

10 Import clearance/formalities

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FOB FREE ON BOARD

FOB (INSERT NAMED PORT OF SHIPMENT)
(INCOTERMS 2020)

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FOB FREE ON BOARD

FOB (INSERT NAMED PORT OF SHIPMENT)
(INCOTERMS 2020)

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FOB FREE ON BOARD

FOB (INSERT NAMED PORT OF SHIPMENT) (INCOTERMS 2020)
point of risk transfer = point of cost transfer
= on board the vessel at the named port of shipment

On board the vessel

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FOB OR FAS?
Example: HUFLIT exports
mangos to USA. Question:
How to stipulate the Incoterms
 Point of risk transfer:
rules in sales contract?

Case 1: On board the vessel at Cai

Case 2: Alongside the vessel at
Mep port, Vung Tau, Vietnam
Cai Mep port, Vung Tau, Vietnam

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Obligations FOB
1 Checking + packaging + marking
2 Loading on means of transport at seller’s premises

3 Export clearance/formalities
FOB FREE ON 4 Delivery/transport document
BOARD 5 Domestic precarriage (inland freight) from seller’s
(INSERT NAMED premises to place/port of shipment
PORT OF 6 Loading on (main) carriage
SHIPMENT) 7 Contract of (main) carriage to named place/port of
(INCOTERMS destination
2020) 8 Contract of insurance
9 Unloading at named place/port of destination

10 Import clearance/formalities

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FOB FREE ON BOARD

The seller delivers the goods on board the vessel
nominated by the buyer at the named port of
shipment or procures the goods already so
delivered.

The seller bears all risks of loss of or damage to the

goods until they have been placed on board the
vessel.

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FOB FREE ON BOARD

FOB (INSERT NAMED PORT OF SHIPMENT) (INCOTERMS
2020)
- Seller’s obligations:
+ To provide the goods, necessary documents (commercial invoice,
transport document),
+ To obtain any export license, conduct all necessary customs
formalities for the export of the goods,
+ To deliver the goods on board the vessel nominated by the
buyer at the named port of shipment or procures the goods
already so delivered.

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Let’s stop for

a while and
summarize
what we have
learnt so far

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CFR COST AND FREIGHT

CFR (INSERT NAMED PORT OF DESTINATION) (INCOTERMS 2020)

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CFR COST AND FREIGHT:

1. POINT OF RISK TRANSFER
2. POINT OF COST TRANSFER

Seller’s Buyer’s
obligations obligations

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CFR & FOB:

1. POINT OF RISK TRANSFER
2. POINT OF COST TRANSFER

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CFR FOB

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CFR COST AND FREIGHT

CFR (INSERT NAMED PORT OF DESTINATION) (INCOTERMS 2020)

Ex. CFR
Rotterdam,
Netherlands
(Incoterms
2020)

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CFR COST AND FREIGHT

CFR (INSERT NAMED PORT OF DESTINATION) (INCOTERMS 2020)

Sơ đồ tuyến của tàu CMA CGM MARCO POLO từ

cảng CMIT đi các nước

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CFR - INCOTERMS®2020
* Cost and Freight - CFR (port of destination)
-Seller must deliver the goods (and transfer the risk) either by placing
them on board the vessel at the shipment port (or by procuring the
goods so delivered).
-Note: 2 critical points:
+ Port of delivery (port of shipment/port of loading): The risk
passes when the goods are on board the vessel at the shipment
port (not until the goods reach the destination);
=> Identifying the port of delivery as precisely as possible. If a
place/point of delivery is not specified/agreed on, the default
position is when the goods have been delivered to the first carrier
at a point entirely of the seller’s choice.
+ Port of destination (port of discharge/port of unloading): The
cost of carriage will be covered by the seller from the agreed
delivery port until the goods reach the destination.
=> Identifying the port of destination as precisely as possible.32

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CFR- INCOTERMS ® 2020

* Cost and Freight - CFR (port of destination)
- Seller’s obligations:
+ To provide the goods, necessary documents (commercial invoice,
transport document),
+ To obtain any export license, conduct all necessary customs
formalities for the export of the goods,
+ To contract for the carriage of the goods from the agreed place
of delivery to the named port of destination,
+ To deliver the goods on board the vessel (or by procuring the
goods so delivered) at the shipment port,
+ To pay the freight and other carriage costs including the cost of
loading the goods and unloading the goods at the place of
destination (but only if those unloading charges were for the seller’s
account under the contract of carriage. If such costs were not for the
Seller’s account, the Buyer must pay unloading costs.) 33

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FAS, FOB & CFR – GROUP WORK (7MINS/4STUDENTS)

A SELLER IN HOCHIMINH CITY, VIETNAM SHALL EXPORT 10,000 TONS
OF PEPPER PACKAGED IN JUTE BAGS BY SEA TO A BUYER IN ROTTERDAM,
THE NETHERLANDS. THE 1 ST CARRIER IS AT VICT.
TRADE TERMS:
CASE 1: FAS TCIT, CAI MEPT, VUNG TAU, VIETNAM (INCOTERMS 2020)
CASE 2: FOB TCIT, CAI MEPT, VUNG TAU, VIETNAM (INCOTERMS 2020)
CASE 3: CFR ROTTERDAM, THE NETHERLANDS (INCOTERMS 2020)

Point of risk transfer Point of cost transfer

Case 1
Case 2
Case 3

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CIF COST INSURANCE AND FREIGHT:

1. POINT OF RISK TRANSFER
2. POINT OF COST TRANSFER

Seller’s Buyer’s
obligations obligations

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CIF COST, INSURANCE AND

FREIGHT
CIF (INSERT NAMED PORT OF DESTINATION)
(INCOTERMS 2020)

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CIF COST, INSURANCE AND FREIGHT

CIF (INSERT NAMED PORT OF DESTINATION) (INCOTERMS 2020)
 Ex. CIF Rotterdam, Netherlands (Incoterms 2010)

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CIF - INCOTERMS®2020
* Cost Insurance and Freight - CIF (port of destination)
-Seller must deliver the goods (and transfer the risk) either by placing
them on board the vessel at the shipment port (or by procuring the
goods so delivered).
-Note: 2 critical points:
+ Port of delivery (port of shipment/port of loading): The risk
passes when the goods are on board the vessel at the shipment
port (not until the goods reach the destination);
=> Identifying the port of delivery as precisely as possible. If a
place/point of delivery is not specified/agreed on, the default
position is when the goods have been delivered to the first carrier
at a point entirely of the seller’s choice.
+ Port of destination (port of discharge/port of unloading): The
cost of carriage will be covered by the seller from the agreed
delivery port until the goods reach the destination.
=> Identifying the port of destination as precisely as possible.39

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CIF- INCOTERMS®2020
* Cost Insurance and Freight - CIR (port of destination)
- Seller’s obligations:
+ To provide the goods, necessary documents (commercial invoice,
transport document),
+ To obtain any export license, conduct all necessary customs
formalities for the export of the goods,
+ To contract for the carriage of the goods from the agreed place
of delivery to the named port of destination,
+ To deliver the goods on board the vessel (or by procuring the
goods so delivered) at the shipment port,
+ To pay the freight and other carriage costs including the cost of
loading the goods and unloading the goods at the place of
destination (but only if those unloading charges were for the seller’s
account under the contract of carriage. If such costs were not for the
Seller’s account, the Buyer must pay unloading costs.) 40

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CIF - INCOTERMS®2020
Cost Insurance and Freight –
CIF (named place of destination)
- Seller’s obligations: (cont.)
+ Obtain cargo insurance:
* complying with the cover provided by Clauses (C) of the Institute
Cargo Clauses (LMA/IUA) or any similar clauses,
* with underwriters or an insurance company of good repute,
* covering, at a minimum, the price provided in the contract plus 10%
(i.e. 110%), in the currency of the contract.
* covering against the buyer’s risk of loss of or damage to the goods
from the agreed point of delivery to at least the point of destination.

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INSURANCE CLAUSES A, B, C – ICC 2009

Source: MSIG

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GUIDANCE NOTE

When CPT, CIP,

CFR or CIF are
used

the seller fulfils its

obligation to
deliver when:

or places them on NOT when the

it hands the goods board the vessel at goods reach the
over to the carrier the port of place of
shipment destination.

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GUIDANCE NOTE
Should precisely identify
two critical points in
CPT, CIP, CFR or CIF
CONTRACT (and why?)

1st point: Place/Port of 2nd point: Place of

delivery destination
[Port of shipment] [Port of destination]

This is point of cost

This is point of risk transfer
transfer

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EXAMPLE: A seller in Hochiminh City, Vietnam shall export

10,000 tons of pepper packaged in jute bags by sea.
Delivery is completed when the goods are placed on
board the vessel at TCIT, Cai Mep, Vung Tau, Vietnam.
The seller has the obligation to contract for carriage to
Port of Rotterdam, Rotterdam, the Netherlands. The seller
has no obligation to contract for insurance.
This carriage is effected through several carriers for
different legs of sea and inland water way transport, first
by a carrier operating a feeder vessel from HIEP PHUOC
PORT to TCIT, CAI MEP, VUNG TAU, and then onto an
ocean vessel from TCIT to PORT OF ROTTERDAM.
What trade terms do you choose for this sale transaction?
How should you stipulate this agreement in the sales
contract?
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Obligations EX FCA FCA FAS FOB CFR CIF CPT CIP DA DP DD

W (1) (2) P U P
1. Checking + packaging +
marking
2. Loading on means of
transport at seller’s premises
D14
3. Export clearance/formalities
4. Delivery/transport document
5. Domestic precarriage (inland
freight) from seller’s premises
to place/port of shipment
6. Loading on (main) carriage
7. Contract of (main) carriage
to place/port of destination
8. Contract of insurance
9. Unloading at named
place/port of destination
10. Import
clearance/formalities
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Slide 48

D14 Proof of delivery is not necessarily transport document.

Ex.
FCA requires the seller to provide the buyer with just "usual proof'' instead of transport document.
However, the seller must provide assistance to the buyer in obtaining a transport document.
DELL, 05/09/2019
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Risk –transfer point/ EX FCA FCA FA FO CF CI CP CI DA DP DD

Delivery point W (1) (2) S B R F T P P U P
At the named place of delivery

Alongside the ship at the port of shipment

[port of loading]
On board the vessel at the port of shipment
[port of loading]
When the goods delivered to the first
carrier contracted by the seller at a point of
delivery entirely of the seller’s choice*
D15
On the arriving vehicle ready for unloading
at named place of destination
At named place of destination, unloaded
from the arriving vehicle

NOTE: * OR: When the goods delivered at a point of delivery specified/identified in the contract

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2.5. NOTES ON THE USE OF INCOTERMS®2020

Critical points in CPT, CIP, CFR, and CIF rules.

When the goods are shipped in containers, FAS, FOB should be
changed to FCA; CFR and CIF should become CPT và CIP.
DPU should only be used when the Seller is sure of his/her
ability to unload the goods at the named place of destination. If
not, DAP should be more appropriate.
DDP should only be used when the Seller is sure of his/her
ability to clear the import customs at the named place of
destination. If not, DAP or DPU should be used.

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Slide 50

D15 DELL 01/10/2019

CPT & CIP: the parties are well advised to identify as precisely as possible in the contract both the place
of delivery and the named place of destination.
if no specific point of delivery agreed on, the default position is that risk passes when the goods
delivered to the first carrier nominated by the seller at a point entirely of the seller’s choice.

if a place of delivery is agreed on in the sale contract, then risk passes when the goods delivered to the
carrier nominated by the seller at that agreeed point of delivery.

Should the parties wish the risk to pass at a later stage (e.g., at an ocean port or airport), they need to
specify this in their contract of sale.
(ICC p147)
DELL, 02/10/2019
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2.6. OTHER VERSIONS OF INCOTERMS

Incoterms®2010 (Classification (2 groups) – based on

mode of transport)
Incoterms 2000 (Classification (4 groups) – based on
point of delivery)

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Point of delivery: closest to seller/closest to buyer?

Group C: Group D:
Group E: Group F:

The The goods are The goods are The goods

goods delivered at Seller’s handed over to the are placed
are premises or at the carrier at an at the
placed disposal of the agreed disposal of
at the carrier at another place/port of Buyer at
disposal named place of delivery. Seller destination.
of Buyer delivery or at a arranges and pays Seller
at his port of shipment. for the carriage to bears all
own Buyer is responsible named place/port transport
premises for the cost and risk of destination, but cost and
or at of carriage from bears the risk of risks up to
another named place/port the goods only the
agreed of shipment. (FCA, upto the agreed delivery –
place of FAS, FOB) point of delivery. destination
delivery. (CFR, CIF, CPT, CIP) point. (DAP,
(EXW) DPU, DDP)
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Gr. Incoterms® 2010 Incoterms® 2020

E EXW EXW
F FCA, FAS, FOB FCA, FAS, FOB
C CFR, CIF, CPT, CIP CFR, CIF, CPT, CIP
D DAT – Delivered at DAP – Delivered at Place
Terminal, DPU – Delivered at Place
DAP – Delivered at Unloaded
Place, DDP – Delivered Duty
DDP – Delivered Duty Paid
Paid

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MAJOR CHANGES
Incoterms® 2010: DAT  Incoterms® 2020: DPU (Delivered at Place
Unloaded)
Incoterms® 2010: CIF / CIP - Insurance cover as provided by
Clauses C of the Institute Cargo Clauses (LMA/IUA)  Incoterms®
2020: Clauses A (CIP), Clauses C (CIF)
Incoterms® 2010: Shipment is carried out by Third party (carrier) 
Incoterms® 2020: arranging for carriage with
Exporter/Seller/Importer/Buyer’s own means of transport (in FCA,
DAP, DPU, DDP)
Incoterms® 2010: Payment by L/C requires FOB terms instead of
FCA.  Incoterms® 2020: Exporter can use FCA + an Onboard B/L
(at Importer’s cost)
Incoterms® 2010: security-related obligations not made clear 
Incoterms® 2020: Security-related responsibilities of customs
clearance and transportation are clearly allocated between the
seller and the buyer.
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DAT - INCOTERMS®2010
DELIVERED AT TERMINAL - DAT (NAMED TERMINAL
AT PORT/PLACE OF DESTINATION)

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DAT - INCOTERMS®2010
DELIVERED AT TERMINAL - DAT (NAMED TERMINAL
AT PLACE/PORT OF DESTINATION)
The seller delivers (or delivery is completed)
(and transfers risk) to the Buyer when:
• The goods are unloaded from the arriving means of
transport placed at the disposal of the buyer at a named
terminal at the named place/port of destination.

The seller’s risks & costs

• The seller bears all risks and costs involved in bringing the
goods to the named terminal at the place/port of
destination (including the risk and cost of unloading the
goods at the named place of destination) (LP)

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DAT - INCOTERMS®2010
DELIVERED AT TERMINAL - DAT (NAMED TERMINAL AT
PLACE/PORT OF DESTINATION)
- Under this rule, the Seller delivers when the goods, once
unloaded from the arriving means of transport, are placed
at the disposal of the buyer at a named terminal at the
named port or place of destination.
- “Terminal” may be a quay, warehouse, container yard
(CY) or road, rail or air cargo terminal. The terminal should
be specified as clearly as possible as the risks to that
terminal are for the account of the seller.

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DAT - INCOTERMS®2010
DELIVERED AT TERMINAL - DAT (NAMED TERMINAL AT
PLACE/PORT OF DESTINATION)
-Seller’s obligations:
+ To provide the goods, necessary documents (commercial invoice,
transport document),
+ To obtain any export license, conduct all necessary customs
formalities for the export of the goods,
+ To contract at its own expense for the carriage of the goods to
the named terminal at the agreed port/place of destination,
+ To unload the goods from the arriving means of transport and
then deliver them by placing them at the disposal of the buyer at
the named terminal at the named place/port of destination,
+ To pay all costs relating to the goods and their transport until
they have been unloaded and delivered.

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Gr. Incoterms 2000 Incoterms® 2010

E EXW EXW
F FCA, FAS, FOB FCA, FAS, FOB
C CFR, CIF, CPT, CIP CFR, CIF, CPT, CIP
D DAF – Delivered at DAT – Delivered at
Frontier Terminal,
DES – Delivered Ex Ship DAP – Delivered at Place,
DEQ – Delivered Ex Quay DDP – Delivered Duty
DDU – Delivered Duty Paid
Unpaid
DDP – Delivered Duty Paid

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Incoterms® 2010 Incoterms 2000

Grouping criteria Modes of transport Point of delivery

Obligations relating to Yes (A2/B2; A10/B10) No

security clearance

Place of application International and Domestic trade International trade

Changes in Group D DAT, DAP, DDP DES, DEQ, DAF, DDU, DDP

Risk transferring place in On board Ship’s rail

FOB, CFR, CIF
Electronic communication Electronic communication = Only some specified docs can be
paper communication replaced by EDI messages
String sales Yes (add the obligation: “procure No
goods shipped”)
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DAF - INCOTERMS
2000
Delivered At Frontier DAF (... named place)
-The seller delivers when the goods are placed at the
disposal of the buyer on the arriving means of transport
not unloaded, cleared for export, but not cleared for
import at the named point and place at the frontier, but
before the customs border of the adjoining country.
-The term "frontier" may be used for any frontier
including that of the country of export. Therefore, it is of
vital importance that the frontier in question be defined
precisely by always naming the point and place in the
term.

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DES – INCOTERMS 2000

DELIVERED EX SHIP (... named port of destination)

The seller delivers when the goods are placed at the
disposal of the buyer on board the ship not cleared for
import at the named port of destination. The seller has
to bear all the costs and risks involved in bringing the
goods to the named port of destination before
discharging.
This term can be used only when the goods are to be
delivered by sea or inland waterway or multimodal
transport on a vessel in the port of destination.

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DEQ – INCOTERMS 2000

Delivered Ex Quay (... named port of destination)
The seller delivers when the goods are placed at the
disposal of the buyer not cleared for import on the
quay (wharf) at the named port of destination. The
seller has to bear costs and risks involved in bringing the
goods to the named port of destination and discharging
the goods on the quay (wharf).
This term can be used only when the goods are to be
delivered by sea or inland waterway or multimodal
transport on discharging from a vessel onto the quay
(wharf) in the port of destination.

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DDU – INCOTERMS 2000

Delivered Duty Unpaid DDU (... named place of

destination)
The seller delivers the goods to the buyer, not cleared
for import, and not unloaded from any arriving means
of transport at the named place of destination.
This term may be used irrespective of the mode of
transport but when delivery is to take place in the port
of destination on board the vessel or on the quay
(wharf), the DES or DEQ terms should be used.

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Q&A THANK YOU FOR YOUR LISTENING

Jun-23 pvnlan 72

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References
1. ICC. Incoterms 2020. ICC pulications. 2020
2. Belay Seyoum. Export-import theory, practices, and
procedures (third edition). Taylor & Francis, 2014
3. Jim Sherlock & Jonathan Reuvid. The Handbook of
International Trade - A Guide to the Principles and Practice
of Export (2nd edition). GMB Publishing Ltd., 2008

Jun-23 pvnlan 73

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